Canada’s Carney set for new job as BoE governor

By Reuters• 27 November 2012

Mark Carney, the surprise outsider choice to head the Bank of England is an overachiever with several big financial roles already notched into his belt, and is also a fan of rock band AC-DC whose lyrics can seem to mirror his life. By Louise Egan.

“Coming on like a hurricane” and “take no prisoners,” the words of AC-DC’s song “Hells Bells” pretty much sum Carney up as he prepares to leave the Bank of Canada and take on the job of Governor of the Bank of England from July 1 2013.

Aged just 47, the marathon runner and former investment banker will keep his position as head of the Financial Stability Board, the global body tasked with reforming a still creaking world financial system, after he moves to London.

“I’m not without ties to the United Kingdom,” Carney told an Ottawa news conference minutes after the announcement. “My wife is a British and Canadian national, my children are both. I lived there for a decade…

“Obviously I think that I can play a constructive role as the next governor in relaunching this institution with its new responsibilities, contributing to price stability, to financial stability and to ensuring that the rebalancing of the UK economy — which is underway — is seen through over the course of the next five years.”

The still-athletic Carney — a sub-four-hour marathon runner — was once described as “un-Canadian” by one Ottawa official because of his sometimes confrontational style.

Carney worked for Goldman Sachs as an investment banker for 13 years in London, Tokyo, New York and Toronto before moving to the Canadian finance ministry and then, at the age of 43, to the top job at the Bank of Canada.

He heads a well-respected central bank that helped make Canada’s recession one of the weakest in the rich country group. No Canadian bank needed government help during the world financial crisis of 2008.

At the same time, Carney had to fight to prove his loyalties lie with ordinary citizens, not bankers. He clashed memorably with JPMorgan Chase & Co Chief Executive Jamie Dimon in Washington in September 2011 as the banker argued against new regulations for the financial sector.

In Reuters interviews, people who interacted with Carney during his public service career stressed two traits that will help him: he is a fighter who does not back down and he speaks the bankers’ language.

“I think he believes he has a halo over him. He’s pretty … confident, for lack of a better word,” said a Canadian academic who has met Carney at meetings and seminars.

Carney took over at the Financial Stability Board (FSB) at a time when bankers were pushing back against tougher capital requirements designed to strengthen financial institutions so taxpayers will not have to rescue them in a future crisis.

The FSB brings together G20 central bankers, finance ministers and regulators to craft and coordinate financial regulation in what has so far been a pretty unglamorous job.

As head of the Bank of Canada, Carney has made it clear that despite his Goldman Sachs background, or perhaps because of it, he believes banks have acted in questionable ways and he is ready to confront them.

Of all his speeches, the ones to banker audiences on financial reform have been the most sharply worded.

A few months after becoming governor in February 2008, Carney earned the wrath of Canadian bank CEOs by suggesting they were hoarding cash and not lending enough to businesses, a message he has repeated on several occasions.

“He’s not just respected and admired but he’s well liked as an individual… In these roles part of your responsibility is to build consensus and I think Mark brings a real personal strength to that requirement,” Gordon Nixon, the chief executive of Canada’s biggest bank, the Royal Bank of Canada, told Reuters a year ago.

But Carney’s investment banker hustle and dominant personality have not gone over so well with some at the Bank of Canada, creating friction and bitterness.

Carney completely overhauled the senior ranks of the bank after he took the job, replacing four of five deputy governors who decide interest rates with him. On paper, decisions are made by consensus but privately, officials have reportedly joked that they always “agree” with their boss.

Carney does not suffer fools gladly and finds it hard to hide his annoyance if he dislikes a question. He has a reputation for losing his temper with bank staff, and has been known to yell at employees in front of others for minor missteps in outbursts that may include the “f” word.

Paul Masson, a University of Toronto economist who was special advisor at the bank as Carney took over observed that Carney was “less lenient” with long-winded staff meetings. Carney is focused and informed, so “doesn’t need to be told things several times,” Masson said.

His communication skills proved less than ideal when in June 2008 a surprise freeze on interest rates exposed a rare disconnect with a market that had unanimously expected a rate cut. Bank economists and traders were perplexed by the sudden reticence to hint at intentions and put it down to Carney’s inexperience in central banking.

His personal life, by comparison, appears simple. He is married with four young daughters and rushes home from international meetings to see the girls before bedtime or attend their soccer matches. DM

Photo: A combination photograph shows Bank of Canada Governor Mark Carney laughing during a news conference in Ottawa on November 26, 2012, and the Bank of England’s Governor Mervyn King speaking at a business conference in London in a July 26, 2012 file photograph. Canadian central bank chief Mark Carney will take over the reins as Governor of the Bank of England next year, British finance minister George Osborne told parliament on November 12, 2012, announcing a surprise choice to replace outgoing BoE Governor Mervyn King. REUTERS/Chris Wattie/Alastair Grant/Pool/Files

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